Middle Ages Regents Practice

What was a key significance of banking emerging during the Commercial Revolution?

1. It encouraged agrarian subsistence

2. It provided capital resources for merchants

3. It limited trade to local markets

4. It established feudal obligations

The correct answer is: It provided capital resources for merchants

The emergence of banking during the Commercial Revolution significantly provided capital resources for merchants, which was crucial for the development of trade and commerce. As merchants needed funds to invest in goods, shipping, and trade routes, the banking system offered mechanisms to secure loans, facilitate transactions, and manage currency. This access to capital enabled merchants to expand their operations beyond local markets, allowing for more extensive trade networks and the growth of a market economy. Banking also introduced financial instruments such as bills of exchange and promissory notes, which reduced the risks associated with long-distance trade. The ability to borrow and invest effectively propelled economic growth, leading to the rise of a merchant class that played a vital role in the economy of the time. Thus, the development of banking was foundational in transforming economic practices and supporting the burgeoning commercial activity characteristic of the era.